The Forest Bank

Great Lakes Grant #GL-985905-01

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Executive Summary

The Center for Compatible
Economic Development was engaged by the Great Lakes National Program
Office to test the feasibility of the Forest Bank concept at two sites
within the Great Lakes basin. Previous and match funding allowed us
to narrow our field to the two target sites.

The Forest Bank idea is
an innovative concept that could provide a market-based tool for
conservation of important forest land while helping to keep it
economically productive.

Given the complexity of
the idea and the many variables that will impact on the potential success
of a Forest Bank, our goal was to create a rigorous methodology for
analyzing sites and providing a clear and honest assessment of their
potential. We believe that we have succeeded in this aim.

Potential sites were
identified initially based on scientific and conservation criteria.
Subsequent analyses looked at the functional and operational aspects of
the forest resource, landowner patterns, timber markets and other issues
that would affect potential sites. Our clear intention was to find a
site or sites that would be suitable places to implement a pilot Forest
Bank with a high likelihood of success. As we identified obstacles
to success at any given site, we dropped it from the process and
concentrated our effort and resources on the remaining sites. Thus,
our analysis for each of the sites is of varying intensity as warranted by
its potential for implementation.

The direct outcomes of
the work completed for the EPA are:

We created and field-tested a comprehensive, comparative methodology for
assessing potential Forest Bank sites;

We pursued analyses of these sites as long as they had potential for
implementation. This included:

Identifying an initial suite of 27 potential sites based on ecological and
landscape criteria;

Using preliminary criteria to pare this to nine sites, and consolidating
some of those sites to create a complex of sites, or a megasite;

Analyzing
critical aspects of the remaining nine sites and eliminating sites
that fell out of the process for various reasons identified in the
report and the appendices;

Completing a detailed forest feasibility analyses at the two sites with
the best potential;

Developing
a full financial analysis and pro forma for the site we feel is the
best option for pilot implementation in the Great Lakes basin,
outlining a set of issues affecting the site, and identifying critical
parameters and benchmarks for moving forward.

We generated legal and financial frameworks for operationalizing the
Forest Bank in the pilot stage.

We created a clear sense of the core business operations that a Forest
Bank must undertake to be successful financially and ecologically.

Our analysis leads us to
believe that the best place to pilot a Forest Bank in the Lake States is
on the Wisconsin/Michigan border in a site that would begin with the
Kakogan and Bad River watershed. This site would likely also
encompass over time the western counties of Michiganís Upper Peninsula
(in a potential cooperative effort with the Western Upper Peninsula Forest
Improvement District) and the Land-o-Lakes district on the border of both
states. We feel no other sites present a good potential to pilot the
Forest Bank concept, though a handful of sites show potential in future if
the pilot sites prove successful.

The potential exists to
implement The Forest Bank in a second site around the Tug Hill in northern
New York. There are some key conservation infrastructures that need
to be developed still, so it is not a good place to pilot the Bank
concept. Over time, as the Conservancy is able to build its presence
on the Tug Hill, we believe Forest Bank could be a good strategy for
conservation there.

It will be extremely
important in moving the Forest Bank concept forward that we pilot the
concept at the three or four sites with the very best potential for
success. Early success will help us build the concept into a
national program for the conservation of working forest lands. In
this sense, the implications of our feasibility analysis have gone beyond
the Great Lakes basin to encompass all of the potential sites we are
exploring for implementation, and our interest in committing to
implementation in the Kakogan project depends on its relative likelihood
for success when weighed against other sites nationally.

It is clear to us at this
point is that The Forest Bank is a concept with great potential that
should be implemented and grown. The support of GLNPO has helped us
to build the business concept and clarify our expectations and
requirements. It has materially advanced our efforts to develop a
market-based tool for forest protection and to assess sites for their
feasibility. Whether or not it leads us to pilot testing in the basin
itself, the feasibility work has clearly given us a handful of potential
sites for expansion if and when we prove the concept in the pilot phase.
For these reasons, we feel the project has been very successful.